What do the most successful businesses have in common?

This is a simple but good question, but does depend on what your definition of “successful” is, too. A lifestyle business is successful if it provides a decent living for the owner. Most freelancers, consultants and coaches are this kind of business. So are most local retail stores. They sell commodity products and services like millions of others.

To me, a successful business is one that can reach multi-millions in revenue, create jobs and has good margins for profit that can be reinvested to grow the business. This kind of business can grow exponentially and reach hundreds of millions in sales over time. These create true wealth and even generational wealth to leave to your children.  And can have a big impact on the world too.  What these businesses have in common, almost always, is:

  1. A differentiated product (or service) that provides high value to the customer compared to its cost.
  2. Barriers to entry that prevent hundreds, or thousands, of others from...
Continue Reading...

What are the benefits of having a business mentor as an entrepreneur?

There are too many to list individually, but most come from having someone with experience. People often confuse smart with experienced and think they can do anything new well. Science and logic says this is not possible with anything complex.

Few things are as complex as entrepreneurship. Hardly anyone would read a book on flying and hop in a plane alone to fly it. Or try to climb Mount Everest alone. But everyone thinks they can build a new business for some strange reason. As a result, we have an 85% failure rate of new businesses. Ones with coaches and mentors greatly outperform because they avoid the hundreds of common mistakes and pitfalls, some of which can be fatal to a business. These companies where the CEO and executives use coaches even outperform the S & P 500 (mature companies) by a wide margin. They are working on constant improvement of the team, which makes all the critical decisions. And this reduces turn-over, challenges people and gives them career growth...

Continue Reading...

What is the important quality or trait to be successful in business?

I see the question “What one quality must an entrepreneur have?” and I never answer it because it is a dumb question. Listing one would be imprudent, as any entrepreneur needs many qualities to be successful. No one will ever make it on a single quality, and I would not want to mislead people.

Here is my list of several that I believe are all necessary, not optional, to create a significant business:

  1. Raw intellect to do critical thinking and analysis so they can make data driven decisions
  2. Management experience to hire, fire, coach and manage people. I do not recommend new college graduates start a company without getting some of this experience first.
  3.  Flexibility and open mindedness to listen to all input and weigh it appropriately based on that person’s relative experience in that area.
  4. The commitment and resilience to work through hard times. This means emotionally, mentally, financially, etc. Success is never a straight line, and almost every company will...
Continue Reading...

What are The Options For A Small Company That Needs To Raise More Capital, But Cannot Dilute Its Present Shareholders Any Further?

Debt if there are assets or cash-flow or a “Play or pay” round. A tactic to force people to ante up a pro rata share because the price is lower than the last one (down round) and so those that do not put in their pro rata share are diluted significantly.

Think about it. If you bought in at $1.00 and the company made little progress, but still has lots of potential, then if the Board/CEO offers new stock at $0.30 you almost have to buy if you still believe in the potential or just the new money will get 3X more stock for their new investment, all effectively taken from the portfolios of the people that did not participate in the round.

Not the friendliest tactic, but sometimes warranted if there are no easy sources. And it will also save the CEO and team months of potential work, but not requiring newer investors - who might force the price down based on the lack of progress anyway. See my blog for many more hints and tips on raising capital.

Click here to get this...

Continue Reading...

What Control Do I Lose Once I Start Taking Money from Outside Investors?

You generally only lose control when outside investors own over 50% of the voting shares. That said, many deals contain “Covenants”. Even a bank will request certain things never be done without their approval. For practical purposes, because the management team is likely to vote together unless there are serious problems, when the outside investors collectively own 50% of the remaining shares is what matters. Because if the management team owns 33% (of voting shares), and the outside investors own 66% they would need a lot of unity to override the founder’s board and share votes.  In this example, the outside investors would have to have ~75% of those outside shares to be voting 50% of all shares.

Click here to get this Financial Package

These things start to matter if things are not going well for some reason. Rarely is there an attempted coup, or do board votes make critical (split) decisions, when things are going well. And if things are not going well,...

Continue Reading...

How Long Does It Take to Raise Venture Capital Typically?

Learning and preparation should start at least a year in advance. Once you are prepared, allow six months. It could be shorter or longer, that will depend on your deal and the market at the time in that industry space. Hot deal areas can get done quickly, most will be several months at least.

Click here to get this Financial Package

Pitching and corralling investors with interest is not in your control.  I can take three to six months. Often the partners become unavailable (on their yachts and at vacation homes, presumably) for summer and winter holidays.  Nothing you can do because usually a partner meeting and vote is required to finalize any deal. Due diligence can take sixty days. Generating a sense of urgency is always a challenge as they have a hundred deals they can do every month. More capital than quality deals. So you need to stand out with a quality team, big market and significant sustainable competitive advantage (barrier to entry).

Join the Free Webinar:...

Continue Reading...

How Do I Get Introductions to Venture Capitalists for a Warm Call Instead of a Cold Call?

My favorite technique is approaching the CEOs they have invested in before, which are often available in public records or on their respective websites. First you need to target very narrowly the right investors for your type of deal by industry, stage and sometimes geography. Then with this focused list you can find their portfolios, and the CEOs of those companies. Although many CEOs will not take your calls the right approach, asking for help, not money, can get you their sympathy and a lunch. Not long ago they were you and the founder, bond can be powerful.

Click here to get this Financial Package

Lawyers can be approached that do deals with these companies, and top-level accountants. Often public records like Edgar where SEC IPO disclosures can be found will point you to these relationships.

Join the Free Webinar: Mastering the Top 10 Challenges of Growth & Scaling

Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to...

Continue Reading...

How Does An Outside Investor Determine Pre Money Valuation?

Here is a graph showing the deals reported to Pitch deck, which could easily be skewed very high by all the smaller deals that go unreported

Click here to get this Financial Package

Join the Free Webinar: Mastering the Top 10 Challenges of Growth & Scaling

Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.

Call (619) SCALE06 or email [email protected] for a complementary strategic consultation


Continue Reading...

How Do I Find an Approach Angel Investors?

Networking is the key strategy. You need to get out there and meet other CEOs, investors and key referral sources at physical events. LinkedIn can be a way to find them, but cold approaches are difficult. I get invitations to invest every week from people I do not know, and I am certain most are not high-quality deals within seconds from their email, deck or type of approach.  Bad English, missing key data, no team background and a hundred other red flags mean an instant rejection. Too many to even send five minutes looking at them when the CEO cannot hit the key points to sell the deal in a few sentences. That is the only thing that will get me to read a deck, unless I want to sell them the help they need to raise funds because I like their idea and think the CEO/Founder has potential.

Click here to get this Financial Package

Warm interdiction are best. This is best if it is a CEO that made an investor money, introducing you to their past investors. Lawyer, accountants and...

Continue Reading...

How is it Possible that A Startup Company Can Raise A $100 Million Dollars Or More?

The more money that is poured into a deal, the lower the risk and more market share they are likely to garner. And hot deals where growth and financial projections are getting real can create a feeding frenzy among investors. It is also likely that these larger investment can scare off smaller competitors.  It is often assumed there are a limited number of winners in any given market.

Click here to get this Financial Package

Furthermore, it could be three or ten, but limited. Therefore, more money means lower risk and higher upside. Sometimes these deal with blow up, proving to have false expectations. WeWork was a good example of this, and so was Theranos. Both we run by entrepreneurs with questionable ethics. And that’s why the most good investors will want to see strong integrity in the CEO and management team. No one wants to invest in a company with a dishonest management team.

Join the Free Webinar: Mastering the Top 10 Challenges of Growth & Scaling


Continue Reading...

50% Complete

Two Step

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.